Week of 22 November 2021
Automotive companies and electric utility companies are not transitioning sufficiently to align with a 1.5°C world
Our key takeaway: Despite some progress and new targets, the World Benchmarking Alliance (WBA) finds that automotive and electric utility companies are not transitioning sufficiently to align with a 1.5°C world – with worrying findings including that automotive companies typically belong to trade associations that lobby against climate policy, automotive companies are lagging behind other sectors on just transition and a number of electric utility companies continue to rely on fossil fuel for electricity generation.
The World Benchmarking Alliance (WBA) has launched its 2021 iteration of the Climate and Energy Benchmarks for both the Electric Utilities sector and the Automotive sector:
- Automotive companies are not transitioning sufficiently to align with a 1.5°C world: The ranking measures the most globally influential automotive manufacturing companies (30) on their alignment to a low-carbon world, using the IEA Net Zero Scenario (1.5°C) pathway for the first time this year. There is some improvement. However, there is a long way to go. “[L]ow-carbon vehicles sales are far outweighed by the huge volumes of internal combustion engine sales by the largest vehicle manufacturers.” To put this in numbers, “[l]ow-carbon vehicle sales made up just 7% of the sales share.” When it comes to setting targets, “not enough companies are underpinning their transition plans with financial commitments and most emissions targets are not ambitious enough for a 1.5°C pathway.” The ranking finds that “companies are failing to use their influence with key stakeholders to accelerate the low-carbon transition”, with a specific finding that all companies assessed are “a member of a trade association that lobbies against climate policy” (except for Tesla, and those in China where lobbying is not transparent).
- Electric utility companies are not transitioning sufficiently to align with a 1.5°C world: The ranking measures the most globally influential electric utility companies (50) on their alignment to a low-carbon world. Like the automotive ranking, the WBA used the IEA Net Zero Scenario (1.5°C) pathway for the first time this year. There is some improvement and one company leading the pack (the Danish state-owned company Ørsted, followed by UK company SSE). However, there is a long way to go – which is particularly disappointing since this sector “has the most advanced and mature technologies for the low-carbon transition and acts as the enabler for other sectors to decarbonize”. To put this in numbers, “[p]ersistent fossil fuel reliance for electricity generation indicates that 98% of companies are expected to exceed their carbon budgets by 2035.” Although targets have improved, “47 of the 50 companies assessed have not aligned their targets with their 1.5°C pathway.” To align with the 1.5°C pathway, “companies must be spending over 78% of their generation capital expenditure (CapEx) on low-carbon power generation”, however this is not the case for many – in particular large state-owned companies.
- Automotive companies are failing on just transition – falling behind electric utility and oil and gas companies: The WBA reiterates that “[t]he global transition to a well-functioning low-carbon economy can only be successful if it is socially just – that is, if the people at the heart of the current carbon-intensive systems are identified and engaged as agents of change.” The 30 keystone automotive manufacturers assessed in this benchmark were also evaluated in WBA’s 2021 pilot Just Transition Assessment (that we covered here). The finding there is that “[t]he automotive sector is in fact the worst performing sector in this regard, falling behind electric utilities and oil and gas companies.” When it comes to electric utility companies, the WBA reiterates its findings from the Just Transition Assessment that although these companies have made progress, “there is still wide disparity between the efforts and considerable room for improvement.”
For more, see WBA, Climate and Energy Benchmarks in Automotive and Electric Utilities: 2021 (November 2021)
WBA, Automotive Benchmark Insights Report (November 2021)
WBA, Electric Utilities Benchmark Insights Report (November 2021)